The garment and footwear industry, locally known as the fa谮, has seen its share of exports drop from 43.4 percent in 2008 just before the onset of the global crisis to 29.1 percent in 2012
TIRANA, Oct. 15 – Exports have been one of Albania’s key sources of growth during the past four years of the global crisis years, significantly contributing to Albania’s moderate growth rates of an average of 3 percent compared an average of the 6 percent in the pre-crisis years. A report published by the country’s state Institute of Statistics on the performance of exports during the 2008-2012 period shows that except for the slight decline of 6 percent in the onset of the global financial crisis in 2009, Albania’s exports registered strong double digit growth rates of 54 percent and 22 percent in 2010 and 2011 before slowing down to 8 percent in 2012.
Garment and footwear products were Albania’s key exports from 2008 to 2011 but were overtaken by exports of ‘minerals, fuels and electricity’ in 2012.
The garment and footwear industry, locally known as the fa谮, has seen its share of exports drop from 43.4 percent in 2008 just before the onset of the global crisis to 29.1 percent in 2012. However, garment and footwear exports climbed from around 49 billion lek (Euro 341 million) in 2008 to 62 billion lek (Euro 431 million) in 2012.
Meanwhile, exports of ‘minerals, fuels and electricity’ have been on a constant upward trend during the past five years climbing from an 18 percent share in 2008 to 35.7 percent in 2012 or from 20 billion lek in 2008 to 76 billion lek (Euro 529 million) in 2012.
Exports have almost doubled during the past five years increasing from a mere 112 billion lek in 2008 to 213 billion lek (Euro 1.48 billion) in 2012, significantly contributing to the narrowing of the trade deficit. The export/import coverage ratio also rose to 40 percent in 2012, from 25.6 percent in 2008.
The International Monetary Fund estimates Albanian exports rose to around 34 percent of the GDP in 2012, up from only 29.3 percent in 2008.
Meanwhile, Albania’s imports have been both increasing and dropping during the past five years, unveiling the poor domestic consumption in a net import country such as Albania. Imports rose by around 14 percent in 2011 but were down by 3 percent in 2012. Imports also dropped by 2.5 percent in 2009. INSTAT data show imports rose by 20 percent to 528 billion lek from 2008 to 2012.
Imports of ‘machinery, equipment and spare parts,’ an indicator also indirectly measuring investments by businesses were Albania’s key imports from 2008 to 2011, accounting for an average of 20 percent of total imports. However, in 2012 they were overtaken by imports of ‘minerals, fuel and electricity.’
The IMF estimates Albanian imports at 52.5 percent of the GDP in 2012, down from 56 percent of the GDP in 2008.
Data show the EU accounted for three-quarters of Albanian exports in 2012, the Western Balkan countries for 12.2 percent and the rest of the world for 12.3 percent.
Lower trade exchanges with Italy, Greece
Crisis-hit Italy and Greece continue remaining Albania’s key trade partners but their share of exports has considerably declined in the past five years. The share of Albanian exports to Italy declined to 51 percent in 2012, down from around 62 percent in 2008. Meanwhile, the share of exports to Greece has almost halved dropping to 4.4 percent in 2012, down from 8.8 percent in 2008.
Albania’s imports from Italy have been on an upward trend climbing from 26.5 percent of total imports in 2008 to 32 percent in 2012. The share of imports from neighbouring Greece dropped to 9.5 percent in 2012 down from 14.6 percent in 2012.
The ongoing recession in Italy and Greece, Albania’s top trade partners and the hosts of more than one million migrant workers sending the overwhelming majority of remittances home, hints the Albanian economy will face another difficult year.
Italy, the destination of more than 50 percent of Albanian exports, registered a 2.4 percent shrink in 2012, after positive growth rates in 2010 and 2011 and recession in 2008 and 2009.
Meanwhile, Greece, which currently remains Albania’ second most important trade partner only for imports has been in its worst ever recession since 2008. Both Italy and Greece are expected to face another year of recession in 2013 before returning to positive growth rates in 2013, according to Eurostat forecasts.
The central bank has warned the Albanian economy will remain conditioned by the performance of top trade EU partners, the nature of fiscal policy and productivity.
The two neighbouring countries account for around 50 percent of Albania’s trade exchange, being the top investors in Albania and the overwhelming source of migrant remittances.
“Albania’s strong trade, investment and remittance ties to Greece and Italy, both of which face continued economic gloom, are likely to continue to constrain growth in the coming year, and the high level of public debt, at close to the statutory limit of 60 per cent of GDP, will limit the room for fiscal manoeuvre,” warns London-based EBRD.
Exports to top trade partner Italy, the destination of more than half of Albanian exports, have also been affected by the crisis there, with their growth rate slowing down. In 2012, Albania exported around 108 billion Lek of goods to Italy, up only 3.6 percent compared 2011, when exports grew by 28 percent year-on-year. Italy is Albania’s top trade partner with 50 percent of total exports and 30 percent of imports. More than 80 percent of footwear and garment products manufactured in Albania, which are the country’s main exports, go to Italy.
Meanwhile, exports to Greece, the country’s second most important trade partner have been severely affected by the crisis in the neighbouring country. Once the second destination of Albanian exports, Greece now ranks only the fifth most important partner with exports in 2012 at 9.4 billion lek, down 5.2 percent compared to 2011. Greece is the second most important partner for imports with trade exchanges accounting for 12.5 percent of the total.
Exposure to Italy
Sovereign debt crisis in Greece has shown little impact on the Albanian economy due to the limited role Greece plays in exports and imports and due to the recent flexibility shown by exporting firms to diversify geographically, says the Finance Ministry in its 2012-2014 economic and fiscal programme. However, the exposure of Albanian economy toward the Italian economy is greater. The share of Albanian exports to Italy is significant bigger at over 50 percent. Until now, financial problems in Italy have had little impact on trade, possibly due to the fact that this country is not always the ultimate destination of Albanian exports. However, a further deterioration in Italy would have a major impact on the Albanian economy. Remittances, which are used mainly to finance household consumption, are expected to fall significantly (in combination with those from Greece). Influence through foreign direct investment is expected to be smaller, as FDI from Italy decreased and their share of Albania’s GDP is relatively small.
